New Charities SORP revealed

The new charity accounting framework will “better meet the needs of users of charity reports and accounts”, it has been suggested.

The words come after regulatory bodies announced that a new Statement of Recommended Practice (SORP) – the accounting framework by which most charities must comply with – will be introduced from 2020.

The SORP-making body – made up of the Charity Commission for Northern Ireland, the Charity Commission for England and Wales and the Scottish Charity Regulator (OSCR) – was asked to undertake a comprehensive governance review of the framework last year.

It came after concerns that charities were not doing enough to promote accountability and transparency, particularly in how charity funds were being used to meet their objectives.

Likewise, the latest statistics suggest that some 44 per cent of charity accounts submitted by qualified examiners and just 18 per cent of accounts submitted by unqualified examiners met the external scrutiny benchmark to comply with the Charities SORP.

Declaring that the Charities SORP “must change in order to meet new public expectations”, the group said a new and improved framework will be introduced from 2020.

The key changes, as summarised in the Charity Commission report, are as follows:

  • Reforms to the SORP committee to ensure a stronger culture of constructive challenge, better stability, and better representation of small charities and funders with an interest in the impact charities have.
  • The introduction of a new engagement process; seven stakeholder groups will be set up to work in partnership with the SORP committee. Each engagement strand will involve individuals and organisations with an interest in financial reporting and the work of the sector, to ensure user needs are understood and considered early on in the process of writing the next SORP.

Commenting on the review, Nigel Davies, Joint Chair and Head of Accountancy Services at the Charity Commission, said: “We know from our own research that the public care deeply about financial transparency from charities. Charity accounts are an important opportunity for trustees to communicate the difference they are making; today’s announcement reflects our joint commitment to ensure that charity accounts work for those that matter – beneficiaries and the public.”

A full written report of the review and the recommendations can be found here.

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